That's right - RETURN ON INVESTMENT is what is all about when you are working on your investment portfolio and there a number of ways to achieve this through real estate.
RENTAL PROPERTIES
Having properties that cash flow is key to any portfolio as they will allow you to bring in money each month. When looking at a potential rental property, it is key to take all the costs into consideration to calculate your monthly / annual cash flow. If you are taking out a loan for the property, your lender may require that you are cash flowing a certain percentage, especially if it is your first property with them.
COSTS TO CONSIDER
Mortgage Payment
Property Taxes
Local Rental Fees
Annual Required Maintenance (for example, Moorhead requires annual furnace maintenance)
Fire, Smoke & Carbon Monoxide Detectors
Fire Extinguishers to Code
Insurance
Lawn & Snow Services
EQUITY
Along with the cash flow of a rental property, when it is time to sell, what is the outlook for the properties equity. Will you need to do a number of updates before putting it back on the market? What is the turnaround for the neighborhood? Can the property only be used for as an investment property? Need help with these questions, that is when your team of trusted partners come in and when we love to help out! Before jumping into the investment, it is good to know it's future outlook and long term gain in addition to cash flow. Let us help you make good, educated investments.
CAPTIAL GAINS
Yep, no matter what, you have to share a piece of your profit when selling an investment property with the government. But there is a way to reduce this, by again planning ahead. First of all, hold the property for minimum of 2 years especially if you are in the higher of the tax brackets. Second, do a 1031 Exchange, but do your homework. There are a number of rules and restrictions with a 1031 that could leave you still paying come tax time at the higher percentage.
Looking for help, give us a call - we have personal experience and have helped a number of client build their successful portfolios. We love to share what we have learned.
Rafter Real Estate
Fargo - Amanda Wolf - 701-200-6048
Bismarck - Kelsi Hach - 701-471-6198
Linton - Danny Imdieke - 701-321-0414
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